Why Should I Hire a CPA?

I always get the question, “why should I hire a CPA; what does a CPA do that’s different than a bookkeeper or accountant or software?”

I recommend to people often about searching and finding a CPA firm that has bookkeepers and accountants on staff.  This way you have the best of all worlds.  The value of hiring the CPA firm with all three housed in one place I believe can be summarized in four top reasons.

First of all, CPA’s are licensed by a state, and must keep up-to-date with tax laws in order to maintain their license in the state. Accountants are not licensed. The CPA examination is, in my opinion, the most rigorous test for anyone who’s going to be licensed to study for and to take. That’s why you may have heard that CPA actually stands for “Can’t Pass Again” because there is so much subject matter packed into four parts of an exam just to qualify for a license; then there’s the classroom education required and the hours of experience required; not to mention the continuing professional education required to maintain the license.  The only way I can describe the whole process is by comparing it to jumping out an airplane without a parachute and having to figure out how to survive the landing because you know you get to jump out of the airplane ten thousand more times this week.

Second of all, while not all CPA’s specialize in taxes, almost all of them are more familiar with the tax laws than are accountants. Knowledge of the tax code is a huge part of the CPA’s licensing examination and many CPA’s take tax courses every year to keep up-to-date on the changes in the tax code. An accountant also may be able to prepare and sign your tax returns, but being an accountant does not provide assurance of certification, nor does it give them the ability to represent their clients before the IRS, even if this person signed your tax return. Accountants are classified as “unenrolled preparers” by the IRS.  Read more from the IRS on Understanding Tax Return Preparer Credentials.

Third of all, a bookkeeper post transactions into software, the accountant reviews the postings and analyzes financial reports, then the CPA does more detailed and thorough financial analysis to advise businesses and individuals on tax or financial matters. Although the designation of “CPA” does not mean that this individual is giving the best advice, a CPA is more prepared and puts his or her license on the line when providing this advice.

Fourth of all, a CPA is eligible to represent his or her clients before the IRS, while the accountant is not. Therefore, if you are paying a professional to prepare your tax return, then make sure this person has full authority to represent you in an audit and to execute any claims on your behalf. This representation is by far, in my opinion, the most critical need an individual or business has for hiring a CPA.

The bottom line is this, the accountant is going to do the daily work and complete tax returns, while the CPA can analyze that work, represent you before the IRS, and help you make more high-level business and tax decisions. Yes, the CPAs charge more; and you get what you pay for.

I’ll leave you with one of my quotes to ponder: “a bookkeeper is going to get you to the sports arena eating the food with the other tailgaters; the accountant will get you to the seats up in the press box eating with all the celebrities and dignitaries; and the CPA will get you down on the field interacting with the players and coaches and back to the locker room eating the catered food with everyone. You get to choose where you want to be and who you get to be with.”

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque, New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides audit, fraud and forensic accounting services as well as tax preparation, bookkeeping and elder care in Albuquerque, New Mexico.